Demands growing for cut in VAT at as hospitality sector reels

Calls for VAT cuts in pubs, clubs and restaurants are growing as the hospitality sector is reeling from the devastating impact of the rail strikes.

According to trade body UKHospitality, last week’s walkouts alone cost the affected industry £360 million.

And the spate of shutdowns has hit London’s economy by £571m in the past year, figures from the Center for Economic and Business Research think tank show.

Now the Labor Party, which is way ahead in opinion polls, is being urged to give the sector major tax breaks by one of its leading business backers.

Sasha Lord, night economic adviser to Manchester Mayor Andy Burnham, wants Labor to commit to cutting VAT for the hospitality and tourism sectors.

The rate was reduced during the Covid lockdown, but returned to 20 percent once the economy reopened.

“The 12.5 percent VAT rate was a lifeline during the pandemic and must be restored,” Lord said.

He added that this would allow the UK to compete with many European countries where the average rate is lower.

“At the end of the day, 12.5 per cent revenue to the exchequer is better than 20 per cent nothing, which will increasingly be the result if businesses fail,” he said.

Lord, an entrepreneur who runs the Parklife music festival, was speaking to delegates gathered for this week’s Labor Party conference in Liverpool.